“We’ll eradicate Twitter. I don’t care what the international community says. Everyone will witness the power of the Turkish Republic.” —Turkish Prime Minister Recep Tayyip Erdogan
It’s hard to believe the quote above is real. It sounds more like something the villain in a James Bond movie would say rather than the announcement of a democratically-elected head of government. Yet “eradicate” Twitter he did, shutting the service down in Turkey for its use as a medium to criticize the government.
And this is where it enters the theater of the absurd. Seeming to mock Erdogan, Turkey’s president Abdullah Gul tweeted via SMS text ““I hope this implementation won’t last long.”
The man has lost his mind. But what does this mean for Turkey?
It means we’ll probably be seeing a new prime minister in Turkey before long. I expect that Erdogan’s party, the AKP, will hold on to power for the foreseeable future. But viewing him as a political liability and seeing potential career-advancing opportunities for themselves, I see his own party booting him from office.
A Turkey without Erdogan would be a more politically stable Turkey for sure. But does any of this make Turkish stocks a buy?
In a vacuum, no. But there is plenty to like about emerging markets for the contrarian investor. Emerging-market funds have seen 21 straight week of withdrawals and many are trading at single-digit price earnings ratios. Turkish stocks trade hands at just 8 times earnings.
My advice: average in to the iShares MSCI Turkey ETF (TUR) on any dips. Plan to hold for 12-18 months for what I expect to be gains of 50-100%. Give yourself a fairly wide 20-25% trailing stop. The pieces are in place for a strong bull run, but I don’t expect it to be smooth.
